If the money prices of resources changes,
A) the SAS curve shifts.
B) the macroeconomic equilibrium is unaffected.
C) the AD curve shifts.
D) the LAS curve shifts.

Question

Quizplus · Accepted Answer

If the money prices of resources changes, it will affect the cost of production and shift the SAS (Short-Run Aggregate Supply) curve. This is because changes in the costs of production will affect the willingness of firms to produce goods and services at each possible price level. As a result, the aggregate supply curve will shift to a new position, reflecting a new level of real output at each possible price level.

If the Money Prices of Resources Changes